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India’s Enforcement Directorate has arrested two men accused of kidnapping BitConnect associates and extorting 2,254 bitcoin, 11,000 litecoin, and ₹14.5 crore in cash during the fallout from one of cryptocurrency’s largest Ponzi schemes.
Nikunj Pravinbhai Bhatt, 33, and Sanjay Kotadia, 49, were detained under the Prevention of Money Laundering Act in connection with violent crimes allegedly committed to recover funds lost when BitConnect collapsed in 2018.
The money laundering investigation stems from multiple FIRs registered by the CID Crime Branch in Surat against BitConnect founder Satish Jurjibhai Kumbhani and several associates.
Investigators say Kumbhani orchestrated the fraud by luring investors into purchasing BitConnect Coin under the false promise of guaranteed high returns.
According to the ED, the BitConnect crypto fraud ran between November 2016 and January 2018, during which the platform promoted its now-infamous Lending Program.
BitConnect claimed it used a proprietary “volatility trading bot” capable of generating returns of up to 40% per month—a promise regulators later described as mathematically impossible.
“These claims were entirely fabricated and designed to create a false sense of legitimacy,” the ED said in its official filing.
Authorities say the BitConnect crypto fraud took an even darker turn when internal disputes escalated into violent crime. A second FIR relates to the kidnapping of two BitConnect associates, Piyush Savaliya and Dhaval Mavani, allegedly on the orders of Shailesh Bhatt.
Investigators allege the kidnappings were carried out to recover funds lost in the BitConnect crypto fraud. In exchange for Mavani’s release, the perpetrators allegedly extorted 2,254 Bitcoin, 11,000 Litecoin, and ₹14.5 crore in cash.
The ED claims Nikunj Bhatt acted as an accomplice in the kidnapping, receiving approximately 266 Bitcoin for his role. Forensic analysis later revealed Bhatt still controlled 10.9 Bitcoin linked to those proceeds.
The investigation further revealed sophisticated laundering techniques. According to the ED, Bhatt knowingly routed more than 246 Bitcoin through third-party wallets to obscure ownership and origin.
The funds were converted into Ethereum and USDT, then distributed across multiple wallets—some allegedly controlled by Sanjay Kotadia.
Authorities say Bhatt transferred at least ₹20.70 crore to wallets linked to Kotadia for crypto trading, while Kotadia personally received an additional ₹4.05 crore.
“These transactions clearly demonstrate layering and concealment consistent with money laundering,” an ED official noted.
Search operations conducted on January 9 across five locations resulted in the seizure of digital devices, incriminating documents, and cash. The ED also froze shares and digital assets worth approximately ₹19 crore.
Officials accused both suspects of providing misleading statements during questioning. “Despite repeated opportunities, they attempted to obstruct the investigation,” the agency stated, prompting prosecutors to label them a flight risk. A special court subsequently granted the ED four days of custodial interrogation.
The ED confirmed that investigations into the BitConnect crypto fraud remain ongoing. Authorities have already seized assets worth ₹2,170 crore from one of the main accused, underscoring the staggering financial damage caused by the scheme.
Once promoted as a revolutionary crypto opportunity, BitConnect is now widely cited by regulators—including the U.S. Department of Justice, which previously charged Kumbhani—as one of the largest Ponzi schemes in digital asset history.
The latest arrests serve as a grim reminder that the fallout from the BitConnect crypto fraud is far from over.
